Trade Promotion Authority: Framing the Debate

In 2015, the U.S. debate regarding free trade may return to levels of intensity not seen since the 1990s, when the North American Free Trade Agreement (NAFTA) entered into force and the World Trade Organization (WTO) was established in Geneva. Since those contentious times, the United States has negotiated numerous bilateral U.S. trade agreements, most recently with Panama, Colombia, and South Korea. However, negotiations regarding the much larger multilateral Transpacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP) have significantly increased the political profile of controversial trade issues.

The TPP and TTIP agreements would cover a significant majority of global economic activity, with the notable exception of China, and could establish key precedents in non-tariff areas such as labor and environmental rules and competition policy.

One of the principal triggers for controversy will be trade promotion authority (TPA), or “fast track,” legislation, which allows the President to present Congress with a final trade agreement for an up-or-down vote, without amendments and within a limited period of time. The prospects for a TPA bill have improved with new Republican majorities in the House and the Senate. In fact, the incoming Republican leader of the Senate Finance Committee, Senator Hatch, has indicated that a TPA bill will be a key priority of the Committee’s 2015 agenda.

Nonetheless, passage of TPA may not be smooth sailing. While NAFTA and the WTO engendered significant debate, their passage may have been eased by the American public’s general lack of experience with global trade deals for the modern age. However, in the last two decades, and especially in the wake of the global financial crisis, increasing numbers of Americans have questioned the assumption that the benefits of free trade outweigh the costs.

Instead, many Americans blame trade agreements for millions of lost jobs, the hollowing out of the U.S. manufacturing base, and stagnant middle class incomes, as U.S. multinationals have outsourced operations to countries with low wages and weak labor and environmental regulations. Critics of free trade have also claimed that the closed-door trade negotiating process has granted privileged access to large corporations, while preventing the broader public from contributing meaningfully to drafting key provisions.

President Obama believes that these critics are “barking up the wrong tree.” He and other proponents argue that the TPP and the TTIP are not like the trade deals of the past. Whereas previous trade deals have already led to the United States being one of the most open and transparent economies in the world, they have not had the same effect on many U.S. trading partners, especially developing countries that were not held to the same standards under the previous generation of agreements. “New age” agreements like TPP and TTIP, they argue, will serve primarily to open foreign markets to U.S. exports and to raise global labor and environmental standards in countries with poor records in those areas.

These will likely be difficult arguments for the President to make, given stringent opposition from his own party, conservative Republican lawmakers, and voters skeptical of free trade. With limited time before 2016 election campaigns begin in earnest, the future of TPA and the President’s hallmark trade agreements is far from certain.

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Wiley Rein has one of the largest and most diverse international trade practices in the United States. Named an “International Trade Group of the Year” for four consecutive years by Law360 and recognized by Chambers USA as one of the country’s elite international trade practices, our Team includes lawyers with expertise across a variety of areas, dedicated international trade advisors, economic analysts, and former U.S. government officials. Read More.